India’s rupee hits record low

The Indian rupee fell to a record low on Thursday on higher energy prices, month’s-end dollar demands from importers and concerns about emerging markets.

The value of the Indian rupee fell again on Thursday to 70.81 to the dollar. The decline was largely caused by the increase in the price of oil. File Photo by Sanjeev Gupta/EPA-EFE

The rupee declined to 70.810 against the dollar on Thursday, after a previous new low of 70.475 to the dollar on Wednesday. A rupee is now worth less than one and one-half U.S. cents, a nearly 11 percent decline against the U.S. dollar since 2018. It is currently Asia’s worst-performing currency.

The foremost cause for the fall is an increase in the cost of oil for India, which imports about 80 percent of its oil. Oil prices have increased seven percent in the past two weeks. More expensive oil leads to a higher import bill and to a widening current account deficit, the measure of the flow of goods, services and investments in and out of the country. Demand for the dollar, and not the rupee, is traditionally strong in the last days of the month as importers use dollars to pay for various imported materials.

August has also been the month for a selloff of emerging markets, prompted by the fall in the Turkish lira.

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The Deutsche Bank Wealth Management report predicted that the rupee will fall to 74 per U.S. dollar by June 2019, CNBC reported on Thursday.